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Development of sustainable heat markets for biogas plants in Europe Project No: IEE/11/025 Biogas markets and the use of heat of biogas plants in Austria, Croatia, Czech Republic, Denmark, Germany, Italy, Latvia, Poland and Romania October 2012

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Page 1: Biogas markets and the use of heat of biogas plants in ...ec.europa.eu/energy/intelligent/projects/sites/iee...Created by Wordle . BiogasHeat Biogas markets and heat use in Europe

Development of sustainable heat markets for biogas plants in Europe

Project No: IEE/11/025

Biogas markets and the use of heat of biogas plants

in Austria, Croatia, Czech Republic, Denmark, Germany, Italy, Latvia,

Poland and Romania

October 2012

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BiogasHeat Biogas markets and heat use in Europe

October 2012 2 WIP

Authors: Rita Ramanauskaite, WIP Renewable Energies, Germany Dominik Rutz, WIP Renewable Energies, Germany Stefan Amann, e7 Energie Markt Analyse GmbH, Austria Christof Amann, e7 Energie Markt Analyse GmbH, Austria Jadranka Maras Abramović, Energy Institute Hrvoje Pozar, Croatia Tomas Vorisek, Energy Efficiency Center SEVEn, Czech Republic Laura Bailón Allegue, Danish Technological Institute, Denmark Jørgen Hinge, Danish Technological Institute, Denmark Ilze Dzene, Ekodoma, Latvia Federico De Filippi, Sogesca srl, Italy Michal Surowiec, Polish Biogas Association, Poland Cristian Mihai Adamescu, Sc Mangus Sol Srl, Romania Augustin Ofiteru, Sc Mangus Sol Srl, Romania Contact: WIP Renewable Energies Rita Ramanauskaite, Dominik Rutz [email protected] [email protected] Tel: +49 89 720 12 731 Sylvensteinstr. 2 81369 Munich, Germany www.wip-munich.de Report No. WP 2 - Task 2.1 / D 2.1 The BiogasHeat project (Development of sustainable heat markets for biogas plants in Europe) is supported by the European Commission in the Intelligent Energy for Europe Programme. The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission is responsible for any use that may be made of the information contained therein. The BiogasHeat project duration is from April 2012 to April 2014 (Contract Number: IEE/11/025).

BiogasHeat website: www.biogasheat.org

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Contents

1 Introduction ___________________________________________________ 4

2 Overview on biogas markets in Europe _____________________________ 5

2.1 Austria ___________________________________________________________ 5

2.2 Croatia ___________________________________________________________ 7

2.3 Czech Republic ___________________________________________________ 8

2.4 Denmark ________________________________________________________ 12

2.5 Germany ________________________________________________________ 15

2.6 Italy ____________________________________________________________ 18

2.7 Latvia ___________________________________________________________ 21

2.8 Poland __________________________________________________________ 24

2.9 Romania ________________________________________________________ 27

3 Status quo on the heat utilisation of biogas plants in Europe __________ 32

3.1 Austria __________________________________________________________ 32

3.2 Croatia __________________________________________________________ 33

3.3 Czech Republic __________________________________________________ 33

3.4 Denmark ________________________________________________________ 34

3.5 Germany ________________________________________________________ 35

3.6 Italy ____________________________________________________________ 37

3.7 Latvia ___________________________________________________________ 38

3.8 Poland __________________________________________________________ 38

3.9 Romania ________________________________________________________ 39

4 Conclusions __________________________________________________ 40

Abbreviations ____________________________________________________ 42

References ______________________________________________________ 43

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1 Introduction

Biogas production increasingly contributes to meeting energy demands in the European market. It opens new opportunities for farmers, industry and the environment as well as offers sustainable solutions to a variety of challenges we face today in the agricultural, transport and energy sectors. Energy efficiency targets are one of the major priorities and challenges on the European energy policy agenda. The EU set a goal to reach 20% reduction in Europe’s primary energy consumption by 2020, meaning that also the biogas sector is faced with a challenge of reaching higher energy efficiency levels in biogas plants. Research and industry already provide attractive solutions for energy savings and energy efficiency, however there remains a huge potential for improvement from the operators’ side.

Using the potential of co-generation in a combined heat and power (CHP) plant is an excellent measure to save energy and use it in an efficient way. However, the heat generated through combustion in gas engines of biogas plants is often not used, but wasted. The simultaneous use of electricity and heat from a CHP plant could contribute considerably to increasing the overall efficiency and thus creating environmental and economic benefits. The use of heat from CHP plants could be an important milestone in solving energy efficiency and energy saving problems, especially in rural areas.

The electric efficiency of a CHP unit is generally 35-40%. The utilisation of produced heat adds 40-60% additional thermal efficiency in the CHP unit and can increase the total efficiency of the CHP up to 85%. There are many ways to utilize heat by the biogas operator himself, especially on farms. However, heat can be also sold to external consumers.

The BiogasHeat project promotes the efficient utilization of heat from biogas plants at the European and national level. The project carries out activities in 9 European countries - Austria, Croatia, Czech Republic, Denmark, Germany, Italy, Latvia, Poland and Romania -and creates a platform for knowledge exchange and transfer from countries with a developed biogas market.

This report was elaborated in the framework of the BiogasHeat project and provides an overview on the current biogas markets and status quo on the heat utilisation of biogas plants in 9 European countries. The individual chapters on the target countries are written by the BiogasHeat partners. In the report the decimal sign is a point (e.g. 15.03 EUR means 15 Euros and 3 Cents), and the thousand separator is a comma (e.g. 1,500 is one thousand five hundred).

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2 Overview on biogas markets in Europe

2.1 Austria

In 2009, renewable energy sources covered around 70% of the Austrian electricity demand. Electricity is mainly produced by hydropower (60%), bioenergy (biogas accounts for 1%) and wind (3%). Photovoltaic and geothermal energy play a minor role accounting for less than 1%. The remaining demand of about 30% is covered by fossil fuels (mainly natural gas and coal) and imports (AEA, 2012a).

In the early 1990’s, only a few biogas plants were operating in Austria. In 2003, a public investment promotion scheme (‘Investitionsförderungen’) and feed-in tariffs for green electricity were launched on the basis of the Green Electricity Act 2002 (Ökostromgesetz, 2002). This led to an increasing number of biogas facilities, especially from agricultural feedstock (Walla et al. 2006). Before 2002, biogas plants used mainly manure and waste materials (AEA, 2012a).

The Green Electricity Act 2002 was amended in 2009. Among other changes, a minimum efficiency (‘Brennstoffnutzungsgrad’) of 60% for biogas facilities was introduced in order to enhance CHP capacities. Only sites achieving this threshold were allowed to apply for the state regulated and annually adopted feed-in tariffs. In 2010, the Austrian feed-in tariff scheme for electricity from renewable energies has been advanced and became more attractive for investors (UBA, 2012).

Table 1 indicates the feed-in tariffs for the biogas production. The tariffs are fixed over the contract period of 15 years. A new Green Electricity Act 2012 has been enacted in 2011 and came into force on 1st July 2012.

Table 1: Electricity feed-in tariffs for biogas production in Austria since 1st January 2012 (Source: ECA, 2012c)

Installed capacity and bonus Tariff in EUR cent/kWh

Tariff in EUR cent/kWh after

contract period

< 250 kW 18.50 9.50

250-500 kW 16.50 8.00

> 500 kW 13.00 8.00

Use of non-agricultural substrates minus 20% minus 20%

Bonus for electricity production in efficient CHP (60%) 2.00 n.a.

Bonus for upgrading biogas to natural gas quality 2.00 n.a.

The feed-in tariffs range from 13 €ct/kWh to 18.5 €ct/kWh depending on the installed capacity of a biogas plant. The highest feed-in tariff is paid for small biogas plants with less than 250 kW installed power. The lowest feed-in tariff is paid for the biogas plants with over 500 kW installed capacity. Unlike Germany, Austria guarantees a bonus of 2 €ct/kWh for electricity produced in efficient CHP unit (60%) for 15 years. The use of non-agricultural substrates leads to 20% lower feed-in tariff. Feed-in tariffs for heat are negotiated bilaterally between the biogas plant operator and the district heating grid provider.

Figure 1 presents (i) the development of operating biogas plants approved within the scheme of the Green electricity Act (‘anerkannte Ökostromanlagen’) and (ii) the electrical capacity since 2002. However, the figures show both operating and planned biogas facilities and respectively installed and planned electrical capacity in MW. In 2010, 360 plants with 103 MW installed electrical capacity were recognized. Around 300 thereof are operating and the remaining sites are planned.

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Figure 1: Development of biogas plants and installed electrical capacity in Austria, 2002-2011 (Source: ECA, 2012a)

The average electrical capacity of newly installed biogas plants was growing from 30 kW to 250 kW between the years 2004 and 2008. However, between 2005 and 2010 the number of newly installed facilities per year was decreasing, even though the installed power in MW was rising (AEA, 2012a).

According to the Austrian Energy Agency (AEA, 2012a), the Austrian final electricity consumption was about 203,000 TJ in 2005. Consequently, the produced power by Austrian biogas operators corresponds to the final electricity consumption with approximately 1% in 2005.

In 2009, around 240 non-agricultural biogas plants were in operation. Most of these plants feed-in the electricity into the grid, but do not use the heat entirely. In Figure 2 the percentage of biogas plants is presented with respect to the source of resources. The feedstock comes mainly from agriculture, followed by sewage and organic waste (Biomasseverband, 2011).

Figure 2: Percentages of biogas plants according to the source of feedstock, 2009 (Source: Biomass Association, 2011; AEA, 2012a)

In 2010, the total revenue in the biogas sector was approximately 50 million EUR. Austria has around 4.6% growing potential for biogas utilisation. 324 full time people are employed in this branch (Umwelttechnik, 2012).

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2.2 Croatia

The biogas market in Croatia is in its early stage of development. The national biogas potential is around 2.6 PJ per year, reflecting only the biogas potential from the manure. It is reasonable to assume that the biogas potential is much higher since the manure has a low energy value and low biogas yields. Biogas from sludge of waste water treatment plants and landfills has not been officially evaluated and yet there lies a significant potential for the biogas production. In order to utilise that potential, it is necessary to assess the size of the biogas potential as well as to create a programme with tailored measures supporting biogas production and utilisation.

Regardless of the official biogas potential, the investors have tapped biomass available for biogas production and at the end of May 2012, 59 agricultural biogas plants and 3 waste water treatment plants were registered in the Registry of RES and Co-generation at the Ministry of Economy. These numbers show a significant increase in the last couple of years thus confirming investors’ increased interest in biogas. All of these biogas projects primarily focus on the electricity generation. The result of only a small number of biogas plants gaining the eligible producer status is a clear indicator that the administrative barriers still remain the main challenge to address in the following period.

Currently, only six agricultural biogas plants and one waste water treatment plant gained the status of eligible producer for the feed-in tariff support scheme. In total these plants have 9.635 MWel installed capacity including a 2 MWel landfill plant currently not in operation. In 2011, the total electricity produced from biogas plants was about 34 GWhel. There are no biogas upgrading plants for biomethane production at the moment.

Croatia recognises the value of biogas both as a tool for GHG emission savings and as an energy carrier. However, an umbrella document that would optimise biogas production and utilisation of different energy forms is still missing. Hopefully, the Law on Renewable Energy Sources that is expected to be adopted in the near future will fill the gap. The harmonisation of actions aimed towards biogas utilisation among the responsible ministries would result in better utilisation of one of the domestic energy sources.

The legal framework for biogas production is leaning on the type of feedstock used for anaerobic digestion. Namely, landfill biogas production is described by legal documents transposing the EU Waste Directive, biogas production from waste water treatment sludge is related to legislation on waters, biogas from organic waste, energy crops and agricultural feedstock is described in the legislation originated from agriculture and waste management. Although biogas is mentioned in more than forty legal documents, the actual biogas production and its utilisation is not well assessed in Croatia and thus only electricity from biogas is supported by concrete measures such as feed-in tariffs.

The energy legislation classifies biogas plants according to the origin of the feedstock and its size. The tariff system for RES-E and co-generation since mid. 2007 provided the feed-in tariffs for electricity production from biogas which were adjusted on an annual basis, in line with the inflation index.

In April 2012, there were 4 biogas plants (in total 4 MWel installed capacity) using agricultural feedstock that have already signed the Electricity Purchase Contract. These power plants are in the process to be connected to the grid. Furthermore, in April 2012, there were 48 new biogas projects pending for the eligible producer status with a total installed capacity of 77.5 MWel. Over 87% of these plants have the installed capacity of 1 MWel or less, which is a result of a drop in the feed-in tariff above 1 MWel.

However, with the very recent adoption (31st May 2012) of the Tariff System for Production of Electricity from Renewable Energy Sources and Co-generation (Official Gazette 63/2012) the situation for the new biogas plants changed. The new feed-in tariffs for biogas plants are defined according to different installed capacity grades (<300 kW, 300 kW - 1 MW, 1 - 2 MW and 2 - 5 MW) (see Table 2).

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For biogas projects, as for the other RES-E projects in Croatia, the contract is signed for 14 years upon gaining the eligible producer status. Autonomous biogas production (independent from the electricity grid) is not supported.

The new requirement for biogas plants above 300 kW of minimal annual total plant efficiency (50%) to qualify for the feed-in tariffs is also worth mentioning. This may in turn have an impact on heat use that this project is trying to promote.

Table 2: Feed-in tariffs for biogas from Tariff System for Production of Electricity from RES and Co-generation (OG 63/2012), in HRK/kWh and €ct/kWh

Type of plant Installed capacity Feed-in tariff

HRK/kWh €ct/kWh**

Biogas power plants: agricultural plants, organic remains and biowaste

300 kW 1.42

18.81

> 300 kW 1 MW 1.20 15.90

< 1 MW ≥ 2 MW 1.20 15.90

2 MW 5 MW 1.12 14.84

Sewage sludge plants and power plants using gas from waste water treatment plants

not specified Average generation price of electricity*: currently 0.53

7.02

* Note: at the time of signing the Electricity Purchase Contract

** Based on an average exchange rate 1EUR=7.546428 HRK, www.hnb.hr

2.3 Czech Republic

The Czech biogas market has seen a very dynamic growth in the last 5-10 years. The primary reason for this was the introduction of support schemes both in the form of operational support (feed-in tariffs and green bonuses) and investment grants via several subsidy programmes (co-funded from Common Agricultural Policy (CAP) and EU Structural and Cohesion funds).

As a result, since 2005 electricity production from biogas (including landfill gas and sewage sludge gas) has increased multiple times and reached at the end of 2010 about 600 GWh which represented around 10% of the overall gross ‘green’ electricity production.

The primary segment responsible for such a significant growth were biogas plants, i.e. installations purposefully built for anaerobic digestion of different substrates originating from agriculture or food production industry. Between 2005 and 2010, their number multiplied by more than 10 and the amount of electricity produced by these plants increased from negligible numbers to nearly 400 GWh relevant to 70% of the overall production of green electricity from biogas netto in 2010. Figure 3 provides information on the development of electricity production from biogas between 2005-2010.

Other segments of the biogas market (CHP units with piston-type engines installed at waste water treatment plants or at landfills producing electricity from sewage gas or landfill gas) were developing at a much slower pace, largely for the reason that the potential for further growth was not so high or was already mostly utilized (the case for RES-E at Waste Water Treatment Plants (WWTPs)).

According to preliminary data, the highest dynamics in the Czech biogas market was in 2011, when over 70 installations (in total more than 50 MWel) were completed and put into operation, thus increasing electricity production by additional 375-400 GWh annually in

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consequent years. A similar, if not even a stronger market growth, is expected in 2012 due to the ‘golden rush’ from the side of investors for completion of their projects under favourable feed-in tariffs conditions before the legislation approved in May 2012 comes into force.

161176

215

267

441

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819

43

92

263

398

5,1% 5,0%

6,3%

7,2%9,5%

10,2%5,1%

10,9%

20,1%

34,3%

59,5%

66,4%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010

(%)(GWh)Development of electricity production from biogas

between 2005-2010

Total electricity (E) production from biogas (GWh)

Only from "new" biogas plants - BPs (GWh)

Share of E from biogas on total E-RES (%)

Share of BPs on total E production from biogas (%)

Figure 3: Development of electricity production from biogas 2005-2010 (Source: Energy Regulatory Office of CR and Ministry of Industry and Trade of CR)

The current legal framework supporting electricity production from biogas is the Law for Support of Electricity from RES 180/2005. The law is effective since 2006 and provides support for investors in the form of guaranteed prices of electricity (feed-in tariffs) or green bonuses for net electricity produced from RES (after deduction of self-consumption of the source). The selection of the regime (feed-in tariff or green bonus) is the decision of the producer and can be changed only once a year. Only in the case of combined use of renewable and non-renewable sources (typically the so called co-firing) the green bonuses can be applied.

The values of the feed-in tariffs/bonuses are determined by the Energy Regulatory Office (ERO) and are published in so called ‘decisions’ issued typically before the end of the calendar year with the validity for the whole next year.

The prices are differentiated according to the type of RES and the year of commissioning the sources. The calculation is based on the principles set forth by the secondary legislation (decree No. 475/2005). The net present value after tax over the lifetime of the generation source, considering discount rate equal to the weighted average capital costs, should not be negative. An attachment to this decree gives the assumed average parameters for all RES types. For biomass and biogas these parameters are indicated in Table 3.

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Table 3: Average technical-economic parameters assumed in setting feed-in tariffs and green bonuses for electricity from biomass and biogas for 2011 (Source: Decree No. 475/2005 in the current wording)

Type of biomass RES-E source Lifetime [years]

Specific capital costs [EUR/kWel]*

Full load operation

hours [hours/year]

Power production from solid biomass firing 20 3,000 5,000

Power production from biogas firing originating from landfill, waste water or closed mines

15 2,000 7,000

Biogas production plant 20 4,400 7,800

*Assumed exchange rate 25 CZK/EUR

Table 4 indicates the electricity feed-in tariffs and green bonuses for new plants to be commissioned in 2012.

Table 4: The level of electricity feed-in tariffs and green bonuses for new RES-E sources on biomass and biogas to be commissioned in 2012 (Source: Price Decision of the Czech Energy Regulatory Office No. 7/2011)

Type of RES feed-in tariff green bonus

€/MWhel (at 25 CZK/€)

biogas from anaerobic fermentation

substrates > 50% from energy crops 165 123

other substrates 142 100

waste water sludge, land-fill and closed mines 103 61

Alongside with the operational form of support, investment grants significantly helped to develop the biogas market in the past 5 years. The highest number as well as volume of grants has been awarded from the Rural Development Programme (co-funded from CAP and EAFRD) targeting to support agricultural enterprises. As of mid. 2011, 146 biogas plant projects have been approved with the total subsidy of about 2.7 billion CZK (~108 million EUR). Typical investment support amounted to 25-30% of eligible costs. Additionally, about 40 projects received support from the Operational Programme Enterprise and Innovation which was intended for privately owned enterprises (other than directly agricultural and public entities).

The original version of the Act 180/2005 included an article saying that the new tariff for the next period (calendar year) must not be lower than 95% of that in the current period. This article was intended to provide a sufficient certainty for investors in case projects require longer preparation. However, it prevented a corresponding quick reaction of ERO if a certain sector experienced a fast drop in specific capital cost, as it was in the case of photovoltaic panels, which increased the profitability and attracted a huge interest of investors. The failure of legislators to pass a change of the law in time lead to an enormous rise in the number of PV installations in 2010 (increase by about 1,500 MW in a single year from 463 MW to 1,958 MW) which resulted in a big rise of the costs for the support of RES of which PV consume more than half while having only a 4% share of electricity produced from RES.

A minor change of the law was adopted in late 2010 which stopped the PV boom. At the same time and throughout 2011 a substantial modification of the RES and CHP support mechanisms has been prepared.

The new bill was discussed in Parliament committees since June 2011 and passed in the Parliament in November 2011. In January 2012 the Senate adopted a version with several

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modifications which were eventually approved by the Parliament on May 9, 2012 (thus overruling the president’s veto).

The new law (Act 165/2012) on the one hand implements stipulations of EU Directive 2009/28/EC and, on the other hand, aims to effectively address some of the drawbacks of the national support scheme applied so far.

The principal changes in the new legislation are the following:

The support of electricity production from RES for plants with installed capacity over 100 kWel only through green bonuses.

The support of electricity production from biomass is given only if produced in the CHP regime; co-firing only under highly efficient CHP regime.

Green bonus for biomethane was introduced.

Green bonus for heat from RES and secondary sources was introduced.

The support of projects using biowaste and secondary energy sources was introduced.

The support for certain RES types can be stopped if the targets set in the National Action Plan have been met.

Responsibility for paying the support was shifted to a market operator.

For the new biogas projects two further important specific conditions are introduced (as a condition for granting the operational support for electricity produced):

Input substrates: at least 30% of biogas should be produced from substrates other than energy crops growing on arable land and from permanent grassland.

Energy efficiency: electricity has to be produced in CHP mode and with effective utilization of primary energy in biomass of at least 50%.

Both conditions try to address the negative developments which are observed on the market due to constantly growing capacities of the installations to allow achieving lower specific investment costs and thus better economy.

The typical average size of new projects for a biogas plant is between 500-700 kWel which requires annually between 10 GWh to 15 GWh of energy equivalent in biogas. This would require 25-50 thousand tons of manure to be processed in the fermentation or 10-15 thousand tons of maize silage. Therefore, the majority of investors optimize the inputs so that energy crops represent between 50 to 100% of the inputs by weight which is 90% or even more according to biogas produced. The second insufficiency has to do with effective heat utilization. Usually, the larger is the capacity, the bigger surplus of heat has to be wasted as no reasonable use can be found in the location where the plant is situated.

Detailed interpretation of conditions stipulated in the new act will be given in the secondary legislation which is still in preparation (to be passed by the government in 2012). The new law will come into force in January 2013, but the application of some conditions is postponed by 24 months (the new requirements on biogas plants will be effective for new plants put in operation after May 2014).

Currently, no biomethane plants are in operation in the Czech Republic. Several projects have been prepared on the conceptual basis, but so far the realization was hindered by the lacking support.

The new Act 165/2012 grants direct support to biomethane injected into the natural gas grid, but ERO is not in favour for biomethane and the actual feed-in tariff to be announced later this year will probably be below the maximum stipulated by the law (1,700 CZK/MWh, ~ 70 €/MWh of higher heating value).

The future development of both biogas and biomethane will depend on the target values set forth in the National Action Plan which will be decisive for the continuation of the operational

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support. The preliminary targets for biomethane are about 10 MW in 2013 followed by 3 MW annually later on.

2.4 Denmark

In Denmark there are over 180 biogas plants, divided into approximately 30 major and minor landfill plants, 65 wastewater treatment plants, a few industrial plants, 22 large centralized biogas agricultural plants and 60 smaller farm biogas plants.

Latest figures from the Energy Statistics of the Danish Energy Agency show that the biogas production in 2010 in Denmark was around 4.3 PJ. Approximately 42% of this production was generated in centralized agricultural plants, 23% in farm plants, around 21% in municipal wastewater treatment plants, 4% in industrial plants, and the rest, about 10%, in landfill sites.

In Denmark a centralized biogas agricultural plant is an installation that receives animal manure from a number of farmers and organic waste from diverse sources for anaerobic treatment. Biogas is converted into heat and power in CHP plants and the digested biomass is returned into storage tanks at the farms or near the fields where it is finally utilized as fertilizer. Most of these plants are cooperatives owned by farmers or heat consumers based on a non-profit principle. That means that normally farmers neither pay nor withdraw profits from the biogas companies, however they benefit from the cost savings in manure handling and fertiliser purchase. Gate fees from the receipt of organic waste and energy sales serve to cover cost in manure transportation and plant operation.

The biggest development in the Danish biogas market took place from 1988 to 1998 under the Danish Biogas Action Programme. During this period 20 centralized biogas plants, still in operation today, were built. From the late 1990’s until 2003 several farm scale biogas plants were established. During the last 9 years the biogas market has remained quite stable without any substantial establishment of new biogas installations. The increase in biogas production is primarily attributed to the improvement in efficiency of the existing biogas plants and to the construction of a few new small farm biogas plants (see Figures 4, 5 and 6). This tendency is changing due to the promotion of the biogas sector as a consequence of the objectives and actions established by the government in the 2009 Green-Growth Plan and in the 2012 Energy Agreement. Therefore, in the next years, a significant increase of the number of biogas plants is expected, some of which are already under development or at the planning stage. In particular, the highest biogas potential of agricultural biogas plants in Denmark is related to manure and organic waste suitable for biogas production. In total these resources could generate at least 40 PJ per year, which is around 4-5% of the present gross energy consumption.

The biogas sector in Denmark covers at present around 3% of the total renewable energy production (137 PJ in 2010) and around 0.44% of the gross energy production (983 PJ in 2010) (EnergiStyrelsen, 2011).

Figure 4: Development of the biogas production 2000 - 2010 (Source: Landbrug et al. 2012)

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Figure 5: Development of agricultural/farm plants in Denmark (Source: Jørgensen et al. 2010)

Figure 6: Development of agricultural/farm plants in Denmark (Source: Nielsen, 2012)

In relation to other EU countries, in 2009 Denmark was the fifth country according to the primary biogas energy production per inhabitant (18 toe (754 GJ)/1,000 inhabitants) and the eleventh country according to the primary biogas energy output (EurObserv’ER, 2010).

In 2010, biogas plant operators in Denmark produced around 335 GWh (1,200 TJ) electricity corresponding to 2.7% of the total gross electrical production from renewable energy sources and covered nearly 0.5% of the total Danish gross electricity consumption (EnergiStyrelsen, 2011). The centralized biogas plants treat about 2 million tons of manure per year, which corresponds to approximately 4-5% of the total manure in Denmark. They handle around 0.5 million tons of organic waste per year, coming mainly from the food industry and slaughterhouses (Nielsen, 2012). Centralized plants have a capacity of treating 100-600 tons of manure and organic waste per day (from 400 to 2,500 kWel), while farm plants have capacities within a range of 10-100 tons per day (approximately up to 500 kWel).

Different types of biomass used in agricultural biogas plants are shown in Figure 7. As indicated in the figure, the use of energy crops, widely utilized in other countries such as Germany, is very limited at present in Denmark. This kind of development requires a high subsidy level to cover production costs of the energy crops, which so far is not the case in Denmark, although there is a lot of interest from existing and planned biogas plants to utilize this biomass resource. Instead, the government encourages the digestion of concentrated manure fractions such like deep litter, poultry manure and manure fibres as well as the digestion of surplus biomass materials such like straw, tops from carrots and potatoes, waste from vegetable or fruit production, and even grass from uncultivated grass-lands (Hjort-Gregersen, 2012).

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Figure 7: Biomass types used in agricultural biogas plants in Denmark (Source: Møller, 2008)

Currently, biogas in Denmark is basically used for combined heat and power production and there is only one plant upgrading biogas and injecting it into the natural gas grid. This plant began operation in September 2011 and is producing 180 Nm3/h biomethane from a sewage plant, corresponding to the consumption of approximately 800 households. In the future biogas is expected to be widely upgraded and distributed in the natural gas grid and/or used as biofuel. There are several reasons for that, among them:

The injection of biomethane into the natural gas grid, or its use in the transport sector, has been made financially more attractive in the 2012 Danish Energy Agreement. It is introducing a new funding scheme in which, among others, biomethane injection into the natural gas grid receives the same subsidy as electricity from biogas produced in CHP plants.

In the same energy agreement the preparation of an overall strategy for the promotion of energy efficient vehicles is established. 9.5 million EUR have been allocated to support the roll out of recharging stations for electric cars, infrastructure for hydrogen as well as gas in heavy transport for the period 2013 – 2015. That is as well related to the new target of 10% of the transport energy coming from biofuels by 2020.

Over 20 years Denmark was a producer of natural gas from the North Sea and has a widely branched natural gas grid, being most of the major cities connected to it. The natural gas resources are diminishing and the price is rising, therefore biomethane is becoming more competitive and gas distribution companies are more interested in purchasing biomethane as well as distributing it via the natural gas grid. Moreover, although there are significant opportunities to incorporate biomethane to replace natural gas in the decentralized CHP, if the biomethane production multiplies, this may be no longer an option in some cases. Not only because of the possibility of exceeding the heating needs of the local area, but also due to competition with other viable methods to replace natural gas e.g. heat from straw or wood chips and solar systems. There are also other factors such like seasonal heat requirements.

The Government Green-Growth Plan 2009 targets to utilize 50% of the manure production in Denmark for energy purposes by 2020, corresponding to 13 PJ (Hjort-Gregersen, 2011; Landbrug et al. 2011). Nevertheless, biogas production increase during the last years is far from being fast enough to meet this objective. According to the Danish Biogas Association, if half of Denmark’s manure production (17 million tons per year) is utilized in biogas plants, around 40 - 50 large biogas plants should be built, each of them utilizing approximately 350,000 - 500,000 tons of manure per year. Some new feasibility studies are considering plants treating around 250,000 tons per year. The group of Arla Food will invest in a biogas plant that is planned to process 400,000 tons of manure and 130,000 tons of by-products

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from dairies. It is expected that the permits and project development will take around 2 years and the plant can be expect to be ready in 2015. Today the largest centralized plant treats around 150,000 tons manure per year (Jensen, 2008).

The investment for the construction of such plants is estimated to be around 0.9-1.2 milliard €. Assuming a fixed period of for example 8 years, this equates with an annual employment effect of about 1,300 to 1,500 persons during the construction period and in the operation phase to a continuous employment of around 800 - 1,000 people (Landbrug et al. 2011).

The new Danish Energy Agreement 2012-2020 contains a wide range of ambitious initiatives, bringing Denmark closer to the political goal of 100% renewable energy supply in 2050. This agreement establishes the generation of 35% of Denmark’s energy from renewable sources by 2020 and indicates that approximately 50% of the electricity consumption must be supplied by wind power. In this context, to ensure the challenging expansion of biogas, the agreement includes several support mechanisms valid from 2012 to 2020, including a feed-in tariff of 115 kr./GJ (15.5 €/GJ) in 2012 for biogas utilized for co-generation or injection into the natural gas grid. These mechanisms are as following (Energiaftale, 2012):

The existing support of 79 kr./GJ (10.6 €/GJ) for biogas production in CHP plants continued as basic subsidy.

Introduction of a subsidy equality so that biogas injection into the natural gas grid receives the same subsidy as biogas produced at CHP plants (79 kr./GJ, 10.6 €/GJ).

Introduction of a new subsidy when biogas is used in industrial processes or as a fuel for transport of 39 kr./GJ (5.3 €/GJ).

Introduction of a subsidy of 26 kr. /GJ (3.5 €/GJ) for all uses of biogas. This subsidy is variable with increasing gas prices. The subsidy increases by 1 cent. kr./GJ (0.14 cent.€/GJ) when natural gas price also increases by 1 cent. kr./GJ (0.14 €ct/GJ).

Introduction of an additional subsidy of 10 kr./GJ (1.3 €/GJ) for all uses of biogas. This subsidy decreases to 2 kr./GJ (0.3 €/GJ) from 2016 to 0 kr./GJ in 2020.

The start-up aid for new biogas projects has been increased from 20% to 30%.

The regulation has been reformed to make it possible to freely change from the fixed electricity tariff to having the actual electricity price plus an extra payment per produced kWh for plants powered strictly with biogas.

Municipal gas companies are allowed to participate in biogas production and it is counted as a related activity to their commercial activities.

The establishment of a task force to study and support specific biogas projects in order to ensure the expected biogas development until 2020. If there is not enough development of new projects in 2012-2013, the parties behind the Energy Agreement will discuss further options, including specific proposals involving biogas purchase obligation. A budget of 9.6 million kr. (1.3 million EUR) from 2012 to 2015 was allocated for the task force to support the development of biogas market.

The National Biogas Task Force continues with a budget of 13.2 million kr. (1.8 million EUR) from 2012 to 2015.

2.5 Germany

Germany is the largest biogas producer in Europe accounting for approximately 50% of the European biogas market share. Over 7,500 biogas plants produce renewable energy and sell it at a fixed price to energy suppliers. The German Biogas Association (Fachverband Biogas, 2011a) estimated that in 2011 the total installed electric output reached 2,780 MW. In 2011 biogas plant operators in Germany produced roughly 18 million MWh electricity. The current electricity production is sufficient to cover 13% electricity demand of around 40 million private consumers. The biogas market contributes with 12% to the total electricity production from

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renewable energy sources and covers nearly 3% of the total electricity consumption in Germany. All that leads to the reduction of carbon dioxide emissions by roughly 12 million tons per year. In Germany, the biogas market already created around 50,000 jobs and reached 10% export rate which is expected to grow in the future.

Different substrates are used for biogas production in Germany: dedicated energy crops (e.g. maize and grass), biowaste, manure and industrial or agricultural residues. In 2011, 46% of the substrate input consisted of dedicated energy crops, 45% of manure, 7% of biowaste and 2% of industrial and agricultural residues (FNR, 2011). The most frequently used substrate in agricultural biogas plants is maize (whole plant as silage) due to its high energy yields per hectare and high methane content in gas output. Maize cultivation for biogas production reached 26% (0.65 million hectares) of the total maize cultivation area in 2011.

Figure 8: Development of the number of biogas plants and the total installed electric output in megawatt in 2011 November (Source: German Biogas Association, Fachverband Biogas e.V.)

Biogas can be upgraded and injected into the natural gas grid as an alternative energy source in the transport sector. The German government set a target to inject 6 billion Nm3

biomethane into the natural gas grid until 2020 (DENA, 2011). This is equivalent to almost 7% of the current natural gas consumption in Germany. In order to reach this goal, approximately 100-200 new biogas upgrading plants per year should be built until 2020. The long term goal until 2030 is to inject 10 billion Nm3 biomethane into the natural gas grid. In 2011 more than 60 biogas upgrading plants injected around 260 million Nm3 biomethane into the natural gas grid (Fachverband Biogas, 2011b). Biomethane from the natural gas grid is used for all applications of natural gas. This includes biomethane use for private consumption, for power plants, and also for the use in transport. At the beginning of 2011, roughly 90,000 natural gas powered vehicles were registered in Germany. Nearly 200 local gas stations already offer biomethane as vehicle fuel in different mixtures ranging from 5% to 100%.

Even though Germany is a front runner in biogas production, it has a much higher growth potential. According to FNR, the technical primary energy potential of biogas until 2020 is 503 PJ, 88% thereof coming from the agricultural sector (FNR, 2011). Therefore, biogas will continue to play an important role in the total energy mix. Stimulating legal framework conditions are necessary to exploit the existing potential and to push the market forward. The Renewable Energy Act (EEG) in Germany is regulating the sustainable development of renewable energy electricity production and significantly contributed to the biogas boom in

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Germany. The law was introduced in 2000 and amended several times. In January 2012, the latest amendment of the EEG was introduced and replaced the old feed-in tariff system of 2009. This applies to all new plants installed after January 2012.Older plants still receive feed-in tariffs under the EEG 2009. The new EEG sets out special provisions for biogas generated through anaerobic digestion. The new law obliges most plant operators to use minimum 60% heat from the CHP plant or to use at least 60% manure.

With the amendment of the EEG in 2012, also a new feed-in tariffs for biogas production came into force (§ 27, § 27a, § 27b, § 27c, EEG 2012). A new class of biogas plants with less than 75 kWel installed capacity (requiring minimum 80% use of manure) was introduced in the feed-in tariff scheme and thus the trend towards larger biogas plants was complemented by an incentive also for small biogas plants. Table 5 provides an overview on the new feed-in tariffs for electricity production from biogas. The basic feed-in tariff ranges from 6 €ct/kWh to 25 €ct/kWh. Small biogas plants with less than 75 kW installed capacity receive the highest feed-in tariff. For the plants above 75 kW installed capacity, an additional tariff is paid, depending on the used feedstock types which are defined as categories. This tariff ranges from 0 €ct/kWh to 8 €ct/kWh. Its payment is based on the ratio between the actual used feedstocks from the two categories.

The feed-in tariff for biogas production from biowaste ranges from 14 €ct/kWh to 16 €ct/kWh. No additional feedstock based tariff is paid for biowaste plants.

If the plants upgrade biogas to biomethane quality and inject it into the natural gas grid, they can receive an additional bonus. The biogas upgrading bonus ranges from 1 €ct/kWh to 3 €ct/kWh depending on the gas output. The base feed-in tariff is guaranteed for 20 years and decreases 2% per year. For example, biogas plants connected to the grid in 2013 or later will get a lower basic feed-in tariff ranging from 5.88 €ct/kWh to 14.01 €ct/kWh in 2013 and from 5.76 €ct/kWh to 13.73 €ct/kWh in 2014.

As alternative to the feed-in tariff, the Renewable Energy Act 2012 introduced also the new tool of ‘direct sale’ of electricity in order to guide biogas plants towards more flexible sale of electricity depending on real demand in the grid and depending on actual electricity prices.

Thus, plant operators can sell the electricity of biogas plants directly to third parties (direct marketing principle). Plant operators can receive a ‘market premium’ which is a new incentive to encourage the operators to become active market participants. The market premium applies only for electricity transmitted through the public grid. It does not apply for electricity sold to the third parties very close to the plant without injection into the grid. The market premium is obtained from the grid operator and the amount of electricity transmitted to the third parties has to be communicated to the grid operator every month. The market premium is calculated each month and covers the difference between the feed-in tariff of biogas and the average market price for electricity (§ 33g, EEG 2012).

Table 5: Feed-in tariffs for biogas in Renewable Energy Act (EEG 2012), €ct/kWh

Installed capacity

Basic feed-in tariff

Feedstock class I

* Feedstock class II**

Biowaste digestion

Biogas upgrading bonus

≤ 75 kW 25 €ct/kWh

3 €ct/kWh up to 700 Nm

3/h

2 €ct/kWh up to 1,000 Nm

3/h

1 €ct/kWh up to 1,400 Nm

3/h

≤ 150 kW 14.3 €ct/kWh 6.0 €ct/kWh 8.0 €ct/kWh 16 €ct/kWh

≤ 500 kW 12.3 €ct/kWh 6.0 €ct/kWh 8.0 €ct/kWh 16 €ct/kWh

≤ 750 kW 11.0 €ct/kWh 5.0 €ct/kWh 8.0/6.0*** €ct/kWh 14 €ct/kWh

≤ 5,000 kW 11.0 €ct/kWh 4.0 €ct/kWh 8.0/6.0*** €ct/kWh 14 €ct/kWh

≤ 20,000 kW 6.0 €ct/kWh 0.0 €ct/kWh 0.0 €ct/kWh 14 €ct/kWh

* Class I mainly includes dedicated energy crops with high yields, such as maize

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** Class II mainly includes dedicated energy crops with lower yields but contributing to higher biodiversity, as well as different types of manure

*** 6 €ct/kWh for manure

Biogas plant operators generating electricity can receive an additional premium to the market premium for the additional installed electrical capacity for a demand-based power generation (§ 33i, EEG 2012). This premium is called ‘flexibility premium’ and is obtained from the grid operator. The flexibility premium is calculated each calendar year and the calculation is done for the additional installed capacity. The premium is paid for 10 years and provides an incentive for additional investments needed for the market-oriented operation of biogas plants. It is expected that the premium will encourage the biogas plant operators to install additional system capacities.

2.6 Italy

The production of bioenergy in Italy is rapidly increasing. The number of installations has increased 14% annually between 2000 and 2010. Figure 9 provides information on the bioenergy production from 2000 to 2010.

Between 2000 and 2010, electricity generated with bioenergy has grown 30% annually going from 1,505 GWh to 9,440 GWh. The production of biogas and bio-degradable municipal waste has grown by average annual rates of respectively 19% and 32%. Extraordinary increase in power generation from bioenergy (approximately 500 additional MW) was reached from 2009 to 2010 due to the census of many small plants, for which the number has increased by over 260 facilities (57%) (GSE, 2011).

Currently, the biggest number of plants is fed with biogas (66%), followed by biomass (20%) and biofuels (14%). We can see it the other way round if we replicate the analysis in terms of power installed: a total 2,351 MW of which 53% of plants burning biomass, 26% bioliquids and only 22% of biogas. An average installed capacity of a biogas plant is around 1 MW, while a biomass plant or a waste treatment plant reaches in average about 9 MW (GSE, 2011).

The gross power for bioenergy production installed during the last four years in Italy increased as listed below (GSE, 2012a):

1.555 MW in 2008.

2.019 MW in 2009.

2.352 MW in 2010.

3.020 MW in 2011

Biofuel Organic Waste Biogas Other Biomasses Bioenergy

Figure 9: Bioenergy production in Italy from 2000 to 2010 (GSE, 2011)

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In 2010, the power plants using bioenergy accounted for 8% of the installed power of the entire renewable generation facilities. The production accounted for 12% of 77,000 GWh, which is total renewable energy sources production in Italy.

In Italy the production of energy from renewable sources is regulated by Decree No. 28/2011 implementing EU Directive 2009/28/EC on the promotion of energy from renewable sources. It indicates that biogas can be defined as follows: ‘landfill gas, sewage purification processes gas and biogas,’ according to the source and fermentation modality. All three types of gas can be indicated as biogas, but their separate accounting in legislation highlights the variety of organic matrices from which biogas can be produced, namely: landfill waste, organic fraction of municipal waste, sewage sludge, manure, abattoir waste, agro-industrial organic waste, crop residues, energy crops (Dlgs 28/2011).

Biogas production in 2010 reached 2,054 GWh, 23% more than in 2009. The difference is due to the plants fed with animal waste for which the production increased from 88 GWh to 221 GWh. Products derived from agriculture and forestry increased from 184 GWh to 390 GWh.

The National Action Plan for Renewable Energy (PAN, 2010) foresees a growth of biogas up to 1,200 MWel and a production of 6 GWhel until 2020. The production of thermal energy is not defined.

Calculations made in 2009 by AEBIOM and FAOSTAT show that the total potential production of national biogas, which is 2 mtoe, would be available using 35% of the total sludge from sewage plants and 5% of the total Available Agricultural Surface. These data confirm that the biogas potential expressed in the National Action Plan for Renewable Energy is underestimated and could be additionally extended by additional 400 MWel

installed power than defined for 2020 (total 1,600 MWel). Recent estimations (ENEA, CRPA) confirm that in Italy the potential of biogas from sewage, animal and plant biomass (5% of UAA) is equal to about 10% of the domestic consumption of the natural gas (CIB, 2010).

Table 6: Installed power (GSE, 2011)

Plants 2009 2010 Δ % 2009-2010

No. kW No. kW No. kW

Biogas 273 378,181 451 507,704 +65.2 +34.2

Urban waste 194 299,254 228 341,338 +17.5 +14.1

Sludge 20 9,922 47 14,569 +135.0 +46.8

Manure 28 17,170 95 41,371 +239.3 +140.9

Forestry and agriculture

31 51,835 81 110,426 +161.3 +113.0

The biogas market in Italy is currently regulated by the Renewables Decree (Decreto Rinnovabili) of the 3rd March 2011 setting the incentive system as of 1st January 2013 through a number of implementation decrees which are currently only partially in force. The draft of the new Renewables Decree for 2013 was recently presented by the Ministry of Economic Development (April 2012) and is currently being discussed by stakeholders.

According to the decree, two main incentives are available for electricity production including biogas: Green Certificates (GCs - Certificati Verdi) and feed-in tariffs for renewables (Tariffa Onnicomprensiva). These incentives exclude Photovoltaic (PV) and thermodynamic plants (CSP) for which a specific Feed-in Premium (Conto Energia) is awarded for 20 years and is added to the revenue from the electricity sold (Eubionet3, 2011).

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Table 7: Energy Production (GSE, 2011)

GWh 2009 2010 Δ % 2009-2010

Biogas 1,665.1 2,054.1 +23.4

Urban waste 1,372.9 1,414.8 +3.1

Sludge 20.1 28.2 +40.7

Manure 88.4 221.0 +149.9

Forestry and agriculture

183.7 390.2 +112.4

The Green Certificates are negotiable securities issued by the GSE in proportion to the energy produced by a qualified Renewable Energy Production Plant facility larger than 1 MW of installed power which came into operation by December 31, 2012 pursuant to the provisions of D. lgs. 28/2011. GCs are an obligation for producers and importers of energy coming from non-RES in order to feed into the grid a percentage of electricity produced by RES plants. The possession of GCs demonstrates the fulfilment of this requirement. GCs can be sold or purchased through bilateral agreements or through GME (Gestore Mercato Elettrico) trading platform. Each GC certifies the production of conventionally 1 MWh of renewable energy (GSE, 2012b). The offer of GC is given by renewable energy producers while the demand is represented by producers of energy from traditional sources which have the obligation to ensure that a percentage of the energy they sell, increasing through the years (5.3 in 2009; 6.8 in 2011; 7.5 in 2012), is produced through RES. GSE (Gestore Servizi Elettrici) is the managing and regulatory body for this market as well as a supplier of the certificates.

For biogas plants that started operation after 31 December 2007, the GSE issues the Green Certificates for 15 years, by multiplying the net energy produced with the following parameters depending on the source (see Table 8).

Table 8: Finance Act 2008 (23/07/2009) updated by Law No. 99/09

Biomass and biogas generated by agricultural activities, farming and forestry by short supply chain

1.80

Landfill gas and sewage gas and biogas purification processes other than those referred to above

0.80

In 2009 GSE decided to provide a regulatory market service for the GCs, buying new ones at the average price of the prior 3 years and retiring expiring ones at a price of 78% of the new ones (SoM, 2012). The resolution 11/2012/R/EFR of the AEEG of 26 January 2012 determined the average value of the GCs price in 2011 at 74.72 €/MWh for their placing on the market (AEEG, 2012). According to SoM 2012, the pattern of the market price of 1 MWh produced through RES combined with the correction parameter from 2009 to 2011 is described in Table 9.

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Table 9: The pattern of the market price of 1 MWh produced through RES combined with the correction parameter from 2009 to 2011

2009 2010 2011 2012

Biomass and biogas produced by agricultural activities, farming and forestry by short supply chain

246 €/MWh

224 €/MWh

220 €/MWh

219 €/MWh

Landfill gas, sewage sludge gas and biogas purification processes other than those indicated above

203 €/MWh

180 €/MWh

177 €/MWh

175 €/MWh

Even if the incentive value has reduced for more than 10%, it can still be valuated as 240% of the normal selling price of energy.

The feed-in tariff is reserved for qualified RES plants not exceeding 1 MW of installed power. From these plants electricity is purchased at incentive prices including energy granted incentive and value. The tariff is valid for a period of 15 years and remains fixed according to the proportion of energy supplied to the network for all plants entering into service by December 31, 2012.

Values of the comprehensive tariff are indicated in the annex of the Finance Act 2008, updated by Law No. 99 of 23 July, 2009 as indicated in Table 10.

Table 10: Feed-in tariffs for electricity production from biogas (Source: GSE, 2012)

Biogas and biomass, (liquid biofuels excluded with the exception of pure vegetable oils traceable through the integrated administration and control system provided for in Regulation (EC) n. 73/2009 of the Council of 19 January 2009)

28 €ct/kWh

Landfill gas, sewage gas purification processes and liquid biofuels (with the exception of pure vegetable oils as above defined

18 €ct/kWh

2.7 Latvia

The history of biogas production in Latvia started in the early 1980’s in several dairy plants and pig farms with experimental studies on new methods for wastewater treatment and production of natural fertilizer. After a period of silence, over the past decade, the biogas sector has started to develop again. The development of the Latvian biogas market was initiated by the introduction of new RES support policy - electricity feed-in tariff, guaranteed payment for installed capacity and investment grants. The installed biogas capacity has increased from around 7 MWel in 2005 to 20 MWel in 2010. In 2010 the annual electricity production from biogas reached 45 GWh which made 0.6% of the total electricity consumption and 1.3% of renewable electricity production in Latvia. In 2011 the number of biogas plants and amount of produced electricity increased more than twice (see Figure 10).

The Latvian Biogas Association states that currently there are 35 operating biogas plants and around 20 plants in the planning or construction process. The average installed electrical capacity of a biogas plant is around 1 MWel. The most common substrates used for biogas production are silage crops (e.g. maize, grass) and livestock manure from pig and cattle farms. Other types of feedstock used in biogas plants are sewage sludge from wastewater treatment plants and organic waste, landfilled municipal solid waste and waste from the food and beverage industry.

In order to achieve the 2020 target for biogas (Figure 11), it will be necessary to evaluate the success of existing support mechanism and make some improvements in the upcoming years. The Ministry of Environmental Protection and Regional Development has started to draft a new Green Economy Law in which new support mechanisms for heat and electricity production from renewable energy sources are planned. Therein, price premiums are being discussed.

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The main law establishing support mechanisms for renewable energy sources (including biogas) in Latvia is the Electricity Market Law adopted on 5 May 2005. The Electricity Market Law states that a certain part of the total consumption of the electricity by end users shall be covered by the electricity produced from renewable energy resources.

29.04 33.85 45.45 100.974

5

13

28

0

5

10

15

20

25

30

0

20

40

60

80

100

120

2008 2009 2010 2011

GWh

years

Electricity generated from biogas plants, GWh

Number of biogas plants

Figure 10: Development of the number of biogas plants and electricity production from biogas in 2008-2011 (Source: Ministry of Economics of the Republic of Latvia)

According to the National Renewable Energy Action Plan, the installed biogas capacity will reach 92 MWel. This will allow producing 584 GWh of electricity from biogas in 2020 (see Figure 11).

36 64130

186266

376 393 421 451 484 526584

711

21

31

44

62 6468

7378

8492

0

100

200

300

400

500

600

700

0

10

20

30

40

50

60

70

80

90

100

2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MWel

years

GWh MWel

Figure 11: Biogas target for Latvia in 2020 (Source: NREAP of Latvia)

According to the Electricity Market Law, energy production from biogas in Latvia is supported through two mechanisms (Figure 12):

Mandatory purchase of electricity generated from renewable energy sources (feed-in tariff) or guaranteed payment for installed capacity for installations with installed electrical capacity more than 1 MWel and at least 8,000 operation hours per year.

Mandatory purchase of electricity generated in CHP plants (feed-in tariff) or guaranteed payment for installed capacity for installations with installed electrical

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capacity of more than 20 MWel and at least 3,000 operation hours per year.

However, the energy producer may choose only one of the two proposed support mechanisms and it is not possible to combine them.

Electricity Market Law

Mandatory purchase of

electricity generated in

cogeneration plants

(Feed-in tariff)

Mandatory purchase of

electricity generated

from RES

(Feed-in tariff)

OR

Guaranteed payment

for installed capacity

if > 20 MWe

if > 3000 h/year

Guaranteed payment

for installed capcity

if > 1 MWe and

if > 8000 h/year

OR OR

Cabinet Regulation No.221 Cabinet Regulation No.262

Figure 12: Biogas support mechanisms under the Electricity Market Law

The rate of the feed-in tariff for electricity generated from biogas (Cabinet Regulation No.262) is calculated depending on the installed capacity of a biogas plant. The tariff is differentiated for biogas plants below 2 MWel and biogas plants over 2 MWel. The feed-in tariff is guaranteed for 20 years and after first 10 years, it is multiplied by 0.8 (reduced by 20%). The feed-in tariff for biogas plants in January 2012, that applied under this regulation was 18.95 €ct/kWh to 21.26 €ct/kWh.

If the electricity producer prefers to receive a guaranteed payment for the installed electrical capacity, it is paid on the basis of a contract between the system operator and the energy producer for 15 years.

Since 2011, new tenders for obtaining the right to receive feed-in tariff under this regulation are not organized and the Ministry of Economics of Latvia has put a moratorium on new tenders until the end of 2013. The Ministry has evaluated 5 years RES support policy and is concerned that too much RES support will dramatically increase the energy price for electricity end users. The Ministry suggests prolonging the moratorium on new tenders until the end of 2016.

Electricity generation from biogas in co-generation process (Cabinet Regulation No.221) is supported through the feed-in tariff and a guaranteed payment for the installed capacity. The electricity feed-in tariff is calculated depending on the installed capacity of the co-generation plant and the final trade tariff for natural gas. The tariff is differentiated for co-generation plants below 4 MWel and plants over 4 MWel. The feed-in tariffs in January 2012 for CHP plants using RES under this regulation ranged from 17.34 €ct/kWh to 23.31 €ct/kWh.

Investment support for biogas plants is provided by the following national and European programmes:

EU Structural Fund programme ‘Infrastructure and Services’ includes an activity providing support for electricity production in co-generation from renewable energy sources (including biogas). Up to 50% of the total eligible costs are covered by the Cohesion Fund. Within this activity 10 biomass CHP plants are constructed, but none of them is using biogas.

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European Agricultural Fund for Rural Development, activity ‘Energy production from agricultural and forestry biomass’ within the framework of the Rural Development Programme for Latvia 2007-2013. The aim of this activity is to promote energy production from agricultural and forestry biomass including the use of biogas in co-generation to generate and use electricity. Up to 40% of the total eligible costs are covered by this grant. In the first two rounds of project proposals 75 projects were submitted and 53 of them were confirmed. The proposed total budget for this activity is 48 million LVL (68 million EUR).

The main national support instrument for biogas and other renewable energy projects in Latvia is the Climate Change Financial Instrument (CCFI) or internationally known as Green Investment Scheme. CCFI is a programme of State Budget and resources are obtained from realizing state owned assigned amount units within the framework of international emissions trading which is one of the Joint Implementation projects under the Kyoto Protocol. So far 16 different project calls have been completed. Several of them included investment support for the installation of biogas technologies.

Previous experience has outlined several conclusions about the development of the biogas sector in Latvia:

The permitting procedure for biogas projects is very resource consuming in terms of both time and money.

Biogas project developers often do not realize the complexity of biogas projects. There is lack of long term experience in operating biogas plants and lack of qualified staff for maintaining the everyday work.

Existing support mechanisms have not been effective to promote the use of excess heat for biogas CHP plants.

No plants with biogas upgrading are yet in operation in Latvia. This is mainly due to the lack of incentives and support mechanisms for biomethane use. The natural gas market in Latvia in practice is not liberalized and no legal framework has been developed to allow the third party access to the natural gas grids. The agreement between the only natural gas grid operator and Latvian government states that a gas company has a monopoly right to use natural gas networks till 2017.

The use of biomethane in transport is also difficult because no compressed natural gas (CNG) stations are operating in Latvia and all infrastructure needs to be built from scratch. Due to the lack of infrastructure, there is no demand for CNG cars in the market and therefore also supply of cars supporting CNG or compressed biomethane gas (CBG) use is very limited at the moment.

2.8 Poland

The RES sector in Poland is still in its infancy. The total installed capacity reached 3.5 GW during the first half of 2012, which makes up only 1.7% of total energy production of the country’s power plants. Out of that only a minute proportion constitutes energy from biogas.

178 biogas plants are currently active most of which either use sewage residues as a substrate or simply burn landfill gas. The energy produced by these plants is mostly used up at the plant itself.

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Table 11: Distribution of RES capacity in Poland (URE, 2012)

Energy source Number of plants Installed capacity [MW]

Biogas 178 111.815

Solar power 6 1.124

Hydropower 750 951.46

Biomass 21 485.409

Wind power 590 1,968.305

Total

3,518.113

Despite being a country with large areas of arable land which could be used for energy crops, only 21 agricultural plants are operating in the market. According to the Agency of Agricultural development, their installed capacity stands at 23.84 MWel. Different estimates put the potential for agricultural biogas plants at 100-160 PJ per year.

During the past three years most of the RES investment flow is going to wind power farms. The initial capital required to build and operate a small wind farm is relatively lower than building a biogas plant. In addition, generous subsidies and grants from the National Fund for Environmental Protection aimed at supporting wind power.

The local electricity supplier is obliged to purchase any amount of electricity from RES. Biogas plant operators having an appropriate license from the Energy Regulatory Office (URE) may sell produced electricity at the average electricity price of the previous year. The local heat supplier is also obliged to purchase heat from RES, but the amount cannot exceed the demand. The grid operator is obliged to give a priority to electricity produced from RES.

Figure 13: Development installed capacity of specific RES in Poland (URE, 2012)

Unlike most other European countries, Poland has not implemented a feed-in tariffs system (FiTS). Instead, it was decided to implement a Renewable Portfolio Standard (RPS) arguing that unlike the FiTS it reflects a free market approach in a better way.

The polish RPS policy requires electricity suppliers to provide a certain percentage of their electricity from the renewable energy resources. Energy suppliers meet RPS requirements

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either by creating or purchasing renewable energy certificates (so called green certificates), or if they fail to do so, by paying a non-compliance fine to URE.

The amount of obligatory RES energy is calculated as a percentage based on the total electricity sales from the previous year. The percentage rates set by the Ministerial Decree 2008 rise every year (see Table 12).

Table 12: Obligatory percentage of RES in total energy sales (Energy Law - Dz.U. 1997 nr 54 poz. 348 with further amendments)

Year percentage of obligatory RES in total energy sales

2008 7.0%

2009 8.7%

2010 10.4%

2011 10.4%

2012 10.4%

2013 10.9%

2014 11.4%

2015 11.9%

2016 12.4%

2017 12.9%

Green certificates do not expire. They are connected to property rights and thus can be traded on the local energy exchange, where the price fluctuates according to supply and demand. Under this system the factual price is capped by the level of the non-compliance fine set each year by URE. For 2012 the level is set to 286.74 PLN/MWh (68.59 EUR/MWh) (Table 13).

Despite the rising levels of non-compliance fines the prices of green certificates have stalled since the beginning of this year and oscillate in the area of 240-260 PLN/MWh (57-62 EUR/MWh). These levels will most probably hold in the foreseeable future, because of a slight oversupply mainly due to a dynamic increase of energy supplied form wind power.

Table 13: Changes in non-compliance fines (URE Reports 2007-2012)

Year non-compliance fine PLN/MWh

2007 240

2008 248.46

2009 258.89

2010 267.95

2011 274.92

2012 286.74

In the energy law amendment of 2011 the legislator has introduced the brown certificate. The certificate will be issued as an alternative to the green certificate to biogas producers injecting biomethane into the gas grid. The price and cap level of this certificate will be set according to the same procedure as for the green certificate. The exact algorithms of calculating the energy equivalent of injected biomethane will be published in a ministerial

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decree. Until then no brown certificates will be issued by URE, because no biogas upgrading plant currently exists in Poland.

Beside the green certificate there are also three types of certificates for electricity generated in CHPs aimed at fostering energy efficiency. Yellow certificates are awarded to operators of co-generation installations with a capacity of up to 1 MW co-producing electricity and heat. The current price fluctuates at around 120 PLN/MWh (28.7 EUR/MWh).

Red certificates are also awarded to operators of co-generation installations above 1 MW. The price for red certificates stands at ca. 10 PLN/MWh (2.39 EUR/MWh). Finally, there are purple certificates for energy produced in CHP plants powered by methane acquired from mines or biogas, with a selling price at around 56 PLN/MWh (13.3 EUR/MWh).

It is important to note that according to the law no yellow and red certificates will be issued after 01.03.2013, but the owner may still re-purchase them at the exchange after this date.

Table 14: Overview on the available RPS in Poland

Certificate type

Eligible operators May be

combined with Issued until

Current market price

PLN/MWh EUR/MWh*

Green certified producers of electricity acquired from RES

yellow, red, purple

2017 254 60.77

Yellow CHPs < 1MWel green 2013 120 28.71

Red CHPs > 1MWel green 2013 10 2.39

Purple CHPs burning methane form mines or biogas

green, brown 2018 56 13.40

Brown Biogas plants injecting biomethane into grid

yellow, red, purple

2018 N/A**

* Assumed exchange rate - 3 month average at 4.18 PLN = 1 EUR

** No market exists as of today because no brown certificates have been issued

2.9 Romania

Before 1990, biogas facilities were mentioned in different policies and strategies on renewable energy sources in Romania. Back in the 80s Romania had a strategy on the development of renewable energies. The strategy introduced a research programme aiming at developing the know-how in biogas production. In addition, it was transposed into real working facilities developed for treating organic waste from food industry companies, farms, distilleries and several farm-scale plants integrated within local communities. Biogas plants were very small, usually between 3-50 m3 per day. The larger plants reached up to 500 m3 per day.

After 1990, despite the existence of new Renewable Strategy in accordance with the EU accession criteria, no biogas production could be noted in Romania. Nevertheless, the potential was recognized in the Strategy for the Capitalization of the Renewable Energy Sources (No. 1535, 18 December 2003). Biomass was defined as a very important source of energy with a huge potential. The biomass energy potential was evaluated at around 7,594 toe/year (318·109 MJ/year), representing about 19% of the total primary resources consumption in 2000. It was divided into the following categories: i) waste from forestry exploitations and firewood (1,175 toe or 49.8·109 MJ/year); ii) wood waste - sawdust or other wood waste (487,000 toe or 20.4·109 MJ/year); iii) agricultural wastes resulting from cereal, corn stems, grapevine waste, etc. (4,799 toe or 200.9·109 MJ/year); iv) biogas (588 thousand toe or 24.6·109 MJ/year); v) urban household waste (545 thousand toe or 22.8·109 MJ/year).

In 2007, Romania joined the EU and the government established the National Energy Strategy. In this new strategy one chapter is dealing with the development of renewable energy sources in Romania. The target by 2020 is to reach 38% of renewable sources in the gross domestic electricity consumption in accordance with Directive 2001/77/EC on the promotion of electricity from renewable energy sources in the internal electricity market and National Energy Strategy. Law 220/2008 introduced the Green Certificates (GC) market for

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electricity production from the renewable energy sources. Biogas received 3 GC per MWh produced. The market for Green Certificates was also regulated so that in fact the lowest value for a GC was not less than 27 EUR and no more than 55 EUR, depending on request and demand. Also, a market for the transaction of GC was developed.

Currently the following aspects concerning biogas production can be outlined:

- No major investment done in this sector since 1990

- No maintenance work done on the existing facilities

- Very few research projects carried out after 1990 in this field

In Romania there is no biogas market yet, even there are some plants mainly integrated into waste water treatment plants as an environmental friendly technology for treating sewage sludge. The reason is that there are no specific provisions and implementation rules of Electricity Law No. 13/2007 and its amendments defining the permits and the measures to be taken for both electricity and natural gas grid connection. Figure 14 provides information on some existing and planned biogas plants.

Figure 14: Distribution of existing and planned biogas plants in Romania

It is worth mentioning that there is no official information on the electricity production from biogas in Romania since 2010. No biogas is sold on the Romanian electricity market to the national electricity grid and there is no transparent information on that.

The reason is that Romania complied with the European RES commitments due to large amount of hydropower. Energy policy does not define biogas as a priority source of energy. Moreover, the biogas sector is rather defined as an environmental sector and not as an energy production sector. Produced energy (electricity and heat) is used locally at the plant facilities, however precise information is lacking. Table 15 lists some biogas plants in Romania which obtained some required permits from authorities. Due to the lack of data, the indicated start-up year of the plants is approximate.

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Table 15: Examples of biogas plants in Romania

No. Company Location County Year Facility Type

Capacity

El. [MW]

Th. [MW]

1 RACOVA COM-AGRO-PAN

Tarzii Vaslui 2012 Co-generation - -

2 SC AGRO NEW ENERGY SA

Perieni Vaslui 2012 Co-generation 3.393 3.414

3 SC COMCEREAL SA Olteneşti Vaslui - Co-generation - -

4

SC IRIDEX GROUP IMPORT EXPORT SRL & Bucharest Landfill Station Chiajna

Chiajna Ilfov 2012

Co-generation***

2.7 -

5 SC UNICOM 3N 2000 S.R.L

Village Turnu FN, City Pecica

Arad 2012 Co-generation 0.716 -

6 SC AAYLEX PROD SRL Verguleasa Buzău 2012 Co-generation - -

7 Wastewater treatment plant & Bucharest City Hall

Glina Ilfov 2015 Co-generation 3.88 4.4

8 SC SOHIPI SRL Codlea Braşov 2015 Co-generation 1.413 1.315

9 SC MB NORUS BIOGAZ SRL

Roman Neamţ 2012 Co-generation (district heating*)

3.3 -

10 SC GHITTA SRL Ardusat Maramures - - - -

11 SC PROD IMPORT CDC SRL

Frecăţei Tulcea 2012 Co-generation 0.5 -

12 SC AVICOM SA Muntenii de Jos

Vaslui 2012 Co-generation 0.34 -

13 SC LUCOSDIOV CONSULTING SRL

Moara Suceava - - - -

14 SC BIO GREEN ENERGY SRL

Perişor Dolj - - - -

15 SC ROMSEM SRL Prundu Giurgiu 2014 - - -

16 SC LUCA ENERGY SRL Tinca Bihor 2012 Co-generation 2.108 -

17 MODLIFT Tufeşti Brăila 2012 Co-generation 0.5 -

18 AGROZOOTEHNICA VĂDENI SRL

Tăriceni-Sirna

Prahova 2012 Co-generation 0.25 -

19 ECOBIOGAZ SRL Vidra Ilfov 2012 Co-generation 14 -

20 Wastewater treatment plant

Sf. Gheorghe

Covasna 2009 Electricity (local**)

0.025 -

21 Wastewater treatment plant

Buzău Buzău 2007 Electricity (local**)

- -

22 Wastewater treatment plant

Târgu Secuiesc

Covasna 2009 Electricity (local**)

0.025 -

23 Wastewater treatment plant

Tulcea Tulcea 2012 Co-generation - -

24 Wastewater treatment plant

Suceava Suceava 2011 Co-generation - -

25 Wastewater treatment plant

Oradea Bihor 2013 Co-generation - -

26 Wastewater treatment plant

Sibiu Sibiu 2010 Electricity (local**)

- -

27 Wastewater treatment plant

Bacău Bacău 2010 Electricity (local**)

- -

28 Wastewater treatment plant

Focşani Vrancea 2010 Co-generation - -

* Designed for district heating

** Produced electricity is used locally at the plant

*** With accreditation approval for granting GC

With electricity grid connection approvals

There are some positive steps in biogas sector, mainly due to the dissemination work among the farmers, managers and policy makers within biogas projects such as BiG>East and

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BiogasIN. However, the development of the sector is rather slow. As emphasized in many different government reports or media articles, there are many barriers slowing this process such as poor legal framework conditions leading to low interest for this kind of business. Financial profits are delayed and relatively small. In addition, agriculture is mainly organized in small sized farms. Figure 15 provides data on the number of biogas facilities reported in Romania from 2007 until 2012. For the following years the data was mainly used from ANRE (National Energy Regulatory Authority). These facilities are approved for connection to the electricity grid.

0

2

4

6

8

10

12

2007 2009 2010 2011 2012 2013 2014 2015 (blank)

(blank)

Electricity local

Cogeneration

Count of No.

Year

Type

Figure 15: Number of biogas facilities reported in Romania (2007-2012)

There were no granted permissions for grid connections until 2012. However, the situation changed and recently the responsible authorities developed detailed rules for the implementation of laws in electricity and renewable energies fields. Table 16 provides information on the large authorized biogas projects in Romania. However, the list is not complete due to the lack of data. Even if the biogas is burned in a co-generation engine, there is no officially reported information about the external use of produced heat onsite or locally. Regarding the plant capacity, most of the plants are lower than 5 MW. In 2012 ANRE (National Energy Regulatory Authority) approved new biogas projects (see Table 16) with energy agreements for biogas facilities in Romania. The energy agreement enables the injection into the national grid and guarantees the Green Certificates.

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Table 16: Recent authorizations for biogas projects in Romania

No. Authorization no. Company Project title

1 Decision 2533 from 2009-11-05 SC AGRO NEW ENERGY SA

Authorization establishment for the realization of a biogas based energy capacity in Perieni

2 Decision 2532 from 2009-11-05 RACOVA COM-AGRO-PAN

Authorization establishment for the realization of a biogas based energy capacity in Tarzii

3 Decision 669 from 2010-03-11 Bucharest municipal authority

Authorization establishment for the realization of a biogas based co-generation power plant and a micro-hydropower plant in Glina

4 Decision 2671 from 2010-10-28 SC IRIDEX GROUP IMPORT EXPORT SRL

Authorization establishment for the realization of a biogas based energy production plant, by co-generation of electricity and heat from biogas in Chiajna

5 Decision 3127 from 2011-12-09 SC AAYLEX PROD SRL

Authorization establishment for the realization of a biogas based energy capacity in Verguleasa

6 Decision 70 from 2012-01-13 SC SOHIPI SRL Authorization establishment for the realization of a biogas based energy capacity in Codlea

7 Decision 913 from 2012-04-26 SC MB NORUS BIOGAZ SRL

Authorization establishment for the realization of a biogas based energy capacity in Roman

8 Decision 1150 from 2012-05-25 S.C. ROMSEM S.R.L

Authorization establishment for the realization of a biogas based energy production plant, by co-generation of electricity and heat from biogas in Prundu

Due to the political uncertainties especially during the last two years, many legislative documents were delayed. In addition, inconsistencies occurred concerning local solutions adopted for RES. For example, the supporting scheme has provided a combination between green certificates and feed-in tariffs. However, there is no legislation in development for feed-in tariffs.

The current legal framework supporting electricity production from biogas is Law 220/2008 on the System for Promoting the Production of Energy from Renewable Sources and its amendments as well as Law 139/2010 (amendment of the Law 220/2008 on the system to promote energy from renewable energy sources) and Emergency Ordinance 88/2011. Ordinance 88/2011 takes into account the Decision of the European Commission (State Aid SA. 33134 2011/N - Romania - ‘Green Certificates for promoting the production of electricity from renewable sources’) authorizing the support scheme.

ANRE accredits the producers of electricity from renewable energy sources in order to benefit from the support system by green certificates (GC). 2 GC are provided for biogas production for each MWh (1 GC for landfill gas). For the high efficiency cogenerated electricity produced in plants and qualified by ANRE as high efficiency plants (implying mandatory external heat use), 1 GC in addition is guaranteed for every MWh produced and delivered. The value of a GC is established by ANRE. For 2012 it is between 28.172 EUR and 57.389 EUR. The values of the feed-in tariffs and/or other bonuses for electricity produced from RES will be determined by the ANRE, as it is provided by the RES support system, but the feed-in tariffs are not yet established.

Romanian government Decision 1215/2009 regarding the criteria and conditions for implementing the support scheme on the promotion of high efficiency co-generation based on the useful heat demand provides an alternative support scheme based on bonuses that

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increase the revenues from electricity sale. The bonus for high efficiency co-generation is provided monthly. The bonus for high efficiency co-generation in 2012 is 4.9 EUR per MWh.

The Electricity Law 13/2007 and its amendments define the connection and selling of the produced electricity. However only in 2012 specific rules were developed, making the authorization of energy producers from biogas possible.

On 16 July 2012 the new Electricity and Natural Gas Law 123/2012 was adopted in Romania and will come into force in March 2013. The law states that that biogas and natural gas should be treated the same. This will encourage the market and allow biomethane injection into the natural gas grid. Of course, this is not enough as corresponding regulations together with implementation rules on the quality of biomethane should be drafted by ANRE.

3 Status quo on the heat utilisation of biogas plants in Europe

3.1 Austria

Commercial heat use of biogas is relatively a new field in Austria, therefore only poor market data is available. Hence, some insights are delivered by a telephone survey with biogas operators, commissioned by E-Control Austria. According to ECA (2012b), the survey was collecting data on the constraints in the heat utilisation from biogas plants. 67 biogas operators were interviewed: 31 with a plant < 100 kW, 21 with a plant between 100 and 400 kW and 15 with a plant > 400 kW. Some major outcomes of the survey are as follows:

80% of the biogas plants are running in connection with agriculture.

37% of the interviewees answered ‘yes’ to the question: Is there a natural gas grid in your surroundings (< 1 km).

95% of the interviewed biogas operators already use the waste heat. The remaining operators state that they plan to use the waste heat in the near future.

Biogas operators explained that the heat is used to heat apartments, dry animal feed and in the district heating system.

39% of the operators use the heat exclusively internally, 16% exclusively externally, 44% internally and externally.

67% of the interviewees state that the resource supply for fermentation purposes is secured forever.

88% of biogas operators receive subsidies for electricity production.

The mean heat use in winter is 85% and the mean use of heat in summer is 42%.

There are differences in heat use between winter and summer. The portion of heat use differs (replied 59%), the form of use differs (replied 21%). 25% of the interviewees answered, that there are no differences.

Some internal and external improvements should be done. Internal improvements involve the extension, modification and installation of the heat exchanging devices, construction and extension of a drying plant, construction and modification of hateable buildings.

External improvements include the expansion of the grid and the installation of the district heating grid. 38% said that they should go for internal improvements, in order to increase heat usage. 25% said that they should go for external improvements in order to increase heat usage. 13% should do both and 25% could not answer to this question.

Reasons for being optimistic about the future: resources are given; biogas is the technology of the future; rising energy costs; rising demand.

Reasons for being pessimistic about the future: rising resource costs; rising operational costs; low electrical power revenues; poor legal framework.

ARGE Kompost & Biogas (2008) developed a guideline for heat utilisation within the framework of klima:aktiv. It can be said, that almost all biogas plants use the heat, but only a minor part uses the heat for the commercial purposes.

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The programme klima:aktiv biogas, financed by the Ministry of Environment, supports consulting measures, training and promotion. The programme aims to enhance the biogas technology. The level of knowledge about biogas has been raised, as the programme follows an active communication strategy. Business relations among plant operators, potential investors, national associations and interested citizens are strengthened thanks to this programme. Also the injection of biomethane - upgraded biogas - into the existing natural gas grid will be encouraged in the nearest future. Improvement of the overall framework is in the centre of the so called biomethane-strategy (klima:aktiv, 2012).

In 2005, the first biogas upgrade facility was put into operation. Between 2007 and 2011, seven further facilities followed. Besides these plants, which inject the biomethane into the existing natural gas grid, three upgrade facilities supply gas stations with biomethane. Thereby, the national natural gas charge (6.60 €/m³) does not apply (ARGE Kompost & Biogas Österreich, 2012).

3.2 Croatia

Currently, there is no article on the heat use from biogas production in the Croatian legislation. The Law on Renewable Energy Sources, currently under preparation, will hopefully set the guidelines for heat use from biogas plants.

Heat produced in the existing biogas plants is used to some extent for own purposes, but it is not monitored. However, most of the biogas plants plan to use the heat either for heating of crops in greenhouses or sanitation of the digestate. How the situation will develop remains still unclear, depending on numerous factors such as potential incentives for heat utilisation in the new legislation and its impacts on the heat utilization in practise.

3.3 Czech Republic

Very few agricultural biogas plants utilize heat to a significant extent. The reason for that is that the economy of scale pushes the unit size to the level of around 1 MWel. The location is optimized for feedstock and digestate transport with no respect to potential heat use.

No statistics about nominal or actual heat use are available. Practically, all plants have flue gas/water heat exchangers installed, but waste all or most of the heat at fan coolers (own biogas heat consumption excluded). Only a minority of projects have implemented from the beginning a system for hot water distribution on the farm to heat the buildings (administration buildings and/or stables especially for young cattle/pig breeding), crop drying or other non-agricultural activities. Plants designed with an initial heat concept for district heating or industrial processes are rare exceptions (about 5-10 cases in Czech Republic so far) and some of them are described in detail as good practice examples in a separate report.

Some incentive schemes for increased efficiency in biogas production are as follows:

The first incentive for a higher heat utilization appeared in the evaluation criteria in the last call of investment support from the Rural Development Programme in 2011 providing additional premium points for the heat use.

A mandatory request for the use of heat of at least 10% of net electricity supply was stipulated in the Decision of the Energy Regulatory Office for new plants in 2012 as a condition for granting the most favourable feed-in tariff for electricity under the current Act 180/205. A statement from ERO explicitly says that heating of digesters is not eligible for satisfying this condition.

The new Act 165/2012 requests at least 50% use of energy, but this requirement will be effective only for new plants commissioned after May 2014.

The same Act also grants direct support for heat production from RES supplied to district heating systems (about 7 €/MWh of heat). This support primarily intends to promote only plants fired with biomass. Eligibility for biogas plants is not fully clear yet, but a preliminary statement from the ministry preparing the secondary legislation is positive. This would create an additional income for the future heat suppliers and

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facilitate financing (additional capital costs) needed for the heat connection, both for new and existing biogas plants.

3.4 Denmark

In Denmark, biogas is utilized mainly for decentralized co-generation plants in which biogas replaces natural gas, being the heat used in district heating systems. According to the Danish District and Heating Association, 1.5 million households are connected to collective district heating networks, meaning that around 60% of the Danish population is kept warm by district heating. There are in total (go and return) more than 60,000 km of district heating pipes in Denmark. Moreover, almost 80% of Denmark’s district heating is produced in combined heat and power plants that generate both heat and electricity simultaneously, and only 20% in dedicated heating plants. CHP production has been highly supported by the government. For example Executive Orders 772 and 582 of 2000 have made it mandatory for municipalities to ensure that all plants above 1 MWel use the heat as well.

The CHP plants are divided in centralized power stations which are located near to large cities and decentralized stations usually found in smaller communities. According to the Danish Energy Agency, there are approximately 16 centralised CHP plants and 415 decentralised CHP plants registered as being suppliers of public heat in Denmark and 380 private decentralised plants that supply heat to enterprises and institutions (Dragomir, 2011). This decentralized district heating structure (Figure 16) has allowed a good use of the heat from biogas.

Figure 16: Distribution of district heating utilities in Denmark (Elleriis, 2010)

In terms of fuel structure used in district heating production, biomass is a leader with around 34% from the total consumption in 2010, followed by natural gas (30%), and coal (24%). The contribution of biogas is around 0.70% (EnergiStyrelsen, 2011).

Larger biogas plants have an average gas engine power of 500 kWel - 700 kWel, while the natural gas fuelled plants have an average engine power of approximately 1,200 kWel.

Biogas plants in Denmark benefit, apart from different grants for biogas use, from tax exemption on heat sale.

In Denmark, biogas is mainly combusted in CHP plants. The heat produced is used internally for heating the digesters and in the hygienisation process, if applicable, as well as externally in district heating networks. All the centralized agricultural biogas plants follow this model. In most cases the CHP plant is an integrated part of the biogas plant, but in other cases the biogas is transported through low-pressure biogas pipelines of few kilometers to a satellite CHP plant in which apart from biogas other fuels as natural gas or biomass can be used.

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The heat of agricultural biogas plants is also used in district heating networks, otherwise it is used in the own farm for heating of the stables and in some cases for heating of some buildings or houses in the proximities of the plant. The amount of heat used is subject to a seasonal variations being in winter time almost 100% of the heat used, while in summer some of it is wasted.

3.5 Germany

The increasing number of biogas plants in Germany includes agricultural biogas plants, industrial biogas plants, waste treatment plants and wastewater treatment biogas plants.

Agricultural biogas plants (Figure 17) dominate in the biogas sector in Germany. Most plants combust biogas in a CHP plant implying that the heat is automatically produced as a by-product during the electricity generation process. Biogas plants are mainly located in rural areas therefore it is often difficult to use waste heat from technical and economical viewpoints. This partly explains why the waste heat utilization of biogas plants in Germany is still insufficient, especially in the older biogas plants where the use of waste heat is often neglected.

Industrial biogas plants, waste treatment plants and wastewater treatment biogas plants often use waste heat in their internal processes. For instance, in waste treatment plants, heat can be used for sanitation and hygienisation.

Figure 17: Typical scheme of biogas process in a farm-based biogas plant in Germany using heat (FNR, 2009)

The introduction of the so-called ‘CHP bonus’ in the amendment of the Renewable Energy Act (EEG) in 2004 resulted in a significant increase of heat utilization of biogas plants. In addition to the basic feed-in tariff, the law had foreseen the additional payment of 2 €ct/kWh if the waste heat of the CHP plant was also used. With the increase of the CHP bonus in the new version of the EEG in 2009, the incentive to expand the use of the waste heat was further strengthened. The law introduced the CHP bonus ranging from 2.94 €ct/kWh to 3 €ct/kWh for the waste heat use. In addition, the amendment of the EEG introduced a so called ‘positive list’ for heat recovery. The implementation of heat utilization concepts defined in the positive list guaranteed an increased CHP bonus. According to a survey of DBFZ (2011), around 80% of biogas plants falling under the EEG 2009 received the CHP bonus.

With the amendment of the EEG in 2012, the CHP bonus of the old feed-in tariff system of 2009 is replaced by an obligation to use the heat of biogas plants. As of 1 January 2012, biogas operators of newly installed biogas plants are required to use at least 25% waste heat

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during the first year of operation and at least 60% heat in the following years from the CHP plant. 25% thereof counts for heating of the digester. Instead of complying with this heat use obligation, a biogas plant operator can also choose alternatively to use at least 60% manure in a biogas plant. In this case, no minimum heat use must be ensured. The full basic feed-in tariff is guaranteed only if a biogas plant operator fulfils the above mentioned requirements. If a biogas plant operator fails to meet this requirement, the feed-in tariff is automatically reduced to the market price of the German electricity stock exchange. The law also indicates different ways to use waste heat in the so called ‘positive list’. The waste heat can be used for the following purposes:

Heating and cooling of buildings

Hot water supply

Heat injection into a local heating system with a length of at least 400 meters

Heating supply for different industrial processes

Heating of buildings for poultry breeding

Heating of animal stables

Heating of greenhouses

Heat treatment of digestate which require sanitation or pasteurization (wastes)

Heat treatment of digestate for fertilizer production

Use of heat to produce additional electricity, especially by ORC and CRC processes

In order to comply with the 60% heat obligation, biogas plant operators have to prove the heat waste utilization. An independent environmental expert has to be consulted in order to report the proof of heat use.

In general, no exact data on the heat use (percentage, amount, etc.) of biogas plants exist for Germany. Some databases about biogas plants are maintained by different organisations, such as the German Biogas Association, the German Energy Agency (DENA) and by the German Biomass Research Centre (DBFZ). Not all data bases include all biogas plants and are publically available. DBFZ annually monitors the development of the biogas plants which use the EEG as basis (DBFZ, 2011). According to this monitoring, DBFZ estimates the amount of used heat of biogas plants in 2010 between 5.8 TWhth and 6.7 TWhth.

In its survey, DBFZ annually asks biogas plant operators about different aspects of biogas production. In 2010 696 filled questionnaires were received and used to analyse the biogas market. The following important results from this survey can be summarised:

The mean own electricity consumption of biogas plants is 7.8%

The mean own heat consumption of biogas plants (mainly for fermenter heating) is 27% of the produced heat

In average 43% of the heat of the CHP plant is used externally

Many biogas plant operators state that the own heat consumption is not measured

Smaller biogas plants (< 500 kWel) need much more own heat than larger plants due to the better volume/surface ratio of larger plants

The largest rate of heat use applies to very small (< 70 kWel) and large (> 500 kWel) plants. Smaller plants can often use the heat for own consumption (e.g. heating of houses, stables, etc.), whereas larger plants can afford to implement expensive heat concepts.

Heat is usually used for heating buildings and hot water and to a smaller extent for heating animal stables or for drying processes (e.g. for wood, grain, wood chips, digestate). Only a very small percentage of plants use heat for local and district

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heating purposes, for heating greenhouses, fish and shrimp farming, additional electricity production (e.g. ORC), cooling, spa, and other niche applications.

The main applications in drying processes are cereal drying followed by logwood and woodchip drying. Only few operators use heat to dry digestate.

Using these results, it must be considered that only a small number of biogas plant operators participated in this survey and that some answers in the survey may be incorrect or incomplete. Nevertheless, DBFZ concludes that the amount of used heat from CHP plants in biogas plants is highly variable and that large deficits in heat use still exist.

3.6 Italy

The amount of updated data available on the heat utilisation from biogas plants in Italy is very poor. Information is fundamentally based on the report of Comuni Rinnovabili 2012 published by Legambiente, the main environmental organization in Italy, with the contribution of GSE and Sorgenia. Also the regulatory framework is at a transitory stage waiting for the new renewable decree to be issued.

The incentives for the production of thermal energy from biogas are represented by the Energy Efficiency Certificates (TEE), also known as white certificates. These are negotiable securities that certify energy savings in the end use of energy. The mechanism of white certificates is not addressed directly to all end users of energy, but to specific actors. They are in fact an obligation for gas and/or electricity distribution companies with more than 50,000 customers to achieve a predetermined power saving target annually. The electricity and gas distribution companies can fulfill their obligation by providing interventions or by buying the bonds in the market from a RES producer. A white certificate corresponds to savings of 1 toe. The average value in 2010 was of 81 €/TEE without VAT (GSE, 2012b).

A survey recently conducted by Legambiente investigated 442 district heating networks in Italy distributed in 380 municipalities with a total capacity of 2,371 MWel, 3,617 MWth and 32.3 MWF (cooling capacity). Among these, 319 are powered by renewable sources with 82.8 MWel, 670 MWth and 9 MWF. 83 are those powered by fossil fuels with a total power of 2,259 MWel, 2,851 MWth and 26 MWF. In addition, for 40 networks it was not possible to get specific data.

According to data from Airu (Italian Urban Heating Association) published in the Yearbook 2010, the source mainly serving district heating networks is natural gas with a rate of 74%, followed by municipal solid waste (MSW) incineration and biomass, respectively with 7.9% and 5.2%. The increase of networks powered by renewable sources is very interesting as it increased from 3% in 1993 to 14% in 2009 with an increase of 11% in 16 years. The total data is considered to be underestimated because specific data are missing from many small scale networks developed in recent years. Table 17 lists some plants combining the production of heat and power from biogas.

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Table 17: CHP plants in Italy

3.7 Latvia

Most biogas plants operating in Latvia are using biogas in CHP units thus generating both - electricity and heat. Since only electricity is supported by the feed-in tariff, heat is considered as a by-product. Moreover, one of the highest feed-in tariffs in Europe in combination with investment grant, allow Latvian biogas plant operators to run their business profitably even without sound utilization of heat energy. Usually part of the heat is used on site to heat the digesters and to provide heating for farms and local buildings, but most of the heat is wasted.

The existing regulatory framework has not been attentive to the heat use efficiency of biogas plants. Cabinet regulation No.262 (feed-in tariff for electricity produced from renewable energy sources) does not set any requirements for biogas operators to use heat efficiently. Almost all existing biogas plants are operating and receiving their feed-in tariffs under this regulation. There are no other incentives for heat use, e.g. heat premiums or bonuses.

The only exemption is related to the feed-in tariff under Cabinet Regulation No.221 (co-generation feed-in tariff). In order to comply with co-generation definition and to receive rights to sell electricity within the mandatory purchase, biogas plant operators are required to prove useful heat use from their plant. In the evaluation criteria, operators can receive additional points, if at least 50% of produced heat energy that remains after the self-consumption, is used effectively. The new draft Green Economy Law is foreseeing to include the heat use requirement as mandatory for biogas plants receiving any kind of public support.

The rapid development of the Latvian biogas market has brought more competition among biogas producers for the feedstock and has increased plant operation costs. More and more biogas plant owners realize that additional income from heat use would help improving the economic performance of their plant. Only few biogas plants have found a solution for useful heat utilization, e.g. greenhouse heating or using heat in drying facilities.

First attempts to use excess heat in district heating systems have been made. However, the cooperation between biogas plant owners and district heating system operators is difficult. DH system operators are not motivated to purchase cheaper heat from biogas plant because they are not allowed to increase their profit over 9%. Moreover, the existing regulation does not allow them to purchase the third party heat at the price that is below the price of resources that is needed to produce this amount of heat energy. In fact biogas operators cannot sell their heat at low price even if it is a waste heat.

3.8 Poland

Currently no laws regulate the heat use from biogas plants. The only incentive (besides purely economic incentives) is the yellow or purple certificate which focuses on production instead of use. The operator applying for these certificates needs to prove the heat

Province Location Power Network Extension

Fuel

kWel kWth km

Bolzano Brunico 6,090 5,400 120 Biomass, biogas, natural gas

Milano Vizzolo Predabissi 3,764 4,000 2,8 Biogas

Bolzano Prato Allo Stelvio 1,690 2,800 21 Chipped biomass, biogas, palm oil

Cremona Cingia De Botti 999 1000 0.75 Biogas

Rimini San Leonardo 250 500 0.5 Biogas

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production in a high efficiency CHP. There are no conditions set out for the actual use of heat.

There is no specific statistical data available on the heat utilization of biogas plants. 11 out of 22 agricultural biogas plants produce electricity and heat in co-generation. In all of the cases heat is being used by the plant itself either to sustain the digestion process and/or other technological processes (like drying the digestate for fertilizer).

3.9 Romania

There is no official data on heat utilisation of biogas plants in Romania. Most biogas plants are equipped with co-generation engines (see figure 18) meaning that the produced heat could be used locally.

In agricultural biogas plants the heat is mainly used in breading farms such as pig, cattle and poultry farms. It is used to heat the farm (e.g. stables or sheds) and other buildings within the farm as well as for domestic hot water production. Steam is used for instance for seed or fodder drying installations or milk processing installations.

In sewage sludge biogas plants from waste water treatment plants, the heat is used for plant facilities and domestic hot water production.

Some of the biogas plants are designed to produce heat for external utilisation, such as district heating, but such plants are not yet in operation. Total electrical capacity reported up to 2012 is 26,967 MWhel and only 3,414 MWhth (see Figure 18).

0,05

32,31

5,293

26,967

9,129

5,715

3,414

0

5

10

15

20

25

30

35

40

45

2007 2009 2010 2011 2012 2013 2014 2015 (blank) Grand

Totalyear

MW

h

thermic (MWh)

electric (MWh)

Figure 18: Capacity of biogas facilities reported from 2007 to 2012

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4 Conclusions

This report provides an overview on biogas markets and the status of heat utilization from biogas plants in 9 European countries: Austria, Croatia, Czech Republic, Denmark, Germany, Italy, Latvia, Poland and Romania.

The overview on the biogas markets showed a large discrepancy between the number of biogas plants and installed capacities in the different countries. Whereas Germany is the leading biogas producer in Europe with about 7,500 installed biogas plants, also other countries, such as for example Czech Republic and Italy had a considerable market growth in the biogas sector in the last few years. Significant developments were also made in Austria and Denmark where many biogas plants have been installed. However, their markets have remained quite stable in the last years without any substantial establishment of new biogas installations. In Denmark this situation is changing due to the promotion of the biogas sector by the government. Thus, in the next years, a significant increase of the number of biogas plants is expected, some of which are already under development or at the planning stage.

A considerable growth was achieved in Latvia in 2011, however, this development was hindered when new tenders for obtaining the right to receive feed-in tariff were stopped until the end of 2013. Despite a high potential, biogas activities in Croatia, Romania and Poland are still very limited with very few installed plants.

The market developments in the different countries are heavily influenced by legal and political framework conditions. In addition, the historical development of the sector as well as other factors such as the general economic welfare of the countries, administrative procedures and access to financing led to uneven developments of the biogas sector in Europe. One of the most important factors that considerably contribute to a fast development and market growth is the application of feed-in tariffs for the sale of electricity generated by biogas production. A major bottleneck, however, is the often lacking consideration of efficiency measures in the feed-in tariff system. Some countries have already noticed this bottleneck and adjusted the feed-in tariff system by including obligatory measures to use the produced heat from CHP units of biogas plants.

In general, the actual status of heat utilization from biogas plants is not satisfactory. Although some heat is used for own purposes and internal processes, the commercial heat use of biogas is rare even though an enormous potential exists. Furthermore, in many countries it is difficult to describe the current situation, as reliable data on the heat use in biogas plants are lacking.

In Denmark, district heating systems as well as CHP production have been highly supported by the government. Due to favourable conditions, almost 80% of Denmark’s district heating is produced in combined heat and power plants that generate both heat and electricity simultaneously. Biogas is utilized mainly for decentralized co-generation plants in which biogas replaces natural gas, being the heat used in district heating systems. It is remarkable that all centralized biogas plants in Denmark are connected to district heating systems and sell the heat.

In contrast, the biogas development in Germany was mainly focusing on the maximization of the electricity production supported by good feed-in tariffs. Thereby, only some plants have established sound heating concepts. With the introduction of several legislative amendments, this situation slowly changes, especially for new plants, as a 60% heat use obligation was recently introduced. Also Austria and Czech Republic have introduced measures to increase the heat use of biogas markets. The future development in the sector will show if these measures are successful.

Furthermore, in some countries the heat use of biogas plants has not yet been considered in legislation. The current focus in these countries is on the development of legal framework

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conditions for the emerging biogas markets to establish a critical number of biogas plants. Legislation on efficient heat use may be introduced at a later stage. It is very important to take into account lessons learnt from other countries and consider the integration of heating concepts at the early stage of biogas market development.

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Abbreviations

AEBIOM European Biomass Association

AEEG Autorità per l’Energia Elettrica ed il Gas (Electrical Energy and Gas Italian Authority)

CAP Common Agricultural Policy

CCFI Climate Change Financial Instrument

CBG Compressed Bio (Biomethane) Gas

CHP Combined Heat and Power

CIB Consorzio Italiano Biogas

CNG Compressed Natural Gas

CRC Clausius-Rankine-Cycle

DBFZ German Biomass Research Center

DH District heating

EEG Renewable Energy Act in Germany

FNR German Agency for Renewable Resources

GSE Gestore Servizi Elettrici (Italian Electrical Services Management Body)

GME Gestore Mercato Elettrico (Italian Electrical Market Management Body)

IEE Intelligent Energy for Europe Programme

ORC Organic Rankince Cycle

MSW Municipal Solid Waste

PAN Piano di azione nazionale per le energie rinnovabili dell’Italia

RES Renewable energy sources

SoM Schoool of Management - Politecnico di Milano

WWT Waste Water Treatment Plant

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